WASHINGTON – Ask most people in this city what the most important step is to increasing economic growth and job creation, and they’ll reply, “Reduce the budget deficit!”

They’re wrong. So-called austerity measures — lowering budget deficits while the economy is still weak — have been shown both here and in Europe to be precisely the wrong medicine. But they could be on to something important if they popped the word “trade” into that sentence.

Simply put, lowering the budget deficit right now leads to slower growth. But reducing the trade deficit would have the opposite effect. Not only that, but by increasing growth and getting more people back to work in higher-than-average value-added jobs, a lower trade deficit would itself help to reduce the budget deficit….

10 Comments

Alex

November 8, 2013 at 9:26 am

Dean Baker has been fumbling around for the last two years trying to come up with a solution for Obama’s lousy economy. First , there wasn’t enough stimulus even though Obama was running up a trillion dollars plus in deficits every year in addition to another trillion dollars of “phony money” being created over at the Federal Reserve. Then, he wanted various unemployment fixes like work-sharing programs which got no traction. Now he says the problem is trade deficits which can’t be fixed because we need to borrow billions from the Chinese just to fund our deficits.He ignores the obvious solution which is to get the government out of the economy completely, and let private enterprise take over. A centralized “state-run” economy has never succeeded anywhere in the world. Russia is a very good example.

ML

November 8, 2013 at 12:49 pm

Russia would be a bad example. China while lacking in moral and social issues has a proficient centralized state-run economy and lets not for get the many Scandinavian countries and Germany. The latter have all out performed the US and with the exception of china have much smaller economies to work with.

The so called free-market ayan rand dream has failed consistently throughout all of time. If you think the US is a success or needs to be decentralized, look at the Great Depression and our economic policies before that, they failed which led to the New Deal.

So Russia is your one big example but pretend that the West had not used every measure possible to cripple them economically and politically. Instead putting aside the fear and worked with them like we worked with other countries during the time and you’d likely find a different Russia much more similar to those like Germany and Sweden currently have. All of which would likely include forms of socialism, democracy, sand free market. All of those ideas can exist simultaneously and are not mutually exclusive.

In the end the rich keep getting richer by creating a fear of government and linking every social welfare program to communism. But your blessed capitalism culture was actually named by Carl Marx so remember that every time you proclaim your love of capitalism you are quoting from Carl Marx and his manifesto.

GOP Rules

November 8, 2013 at 2:47 pm

This post makes no sense. The balance of payments has gone down significantly (about 40%) now that we are importing a lot less oil and are on the verge of being a net exporter. From the heady days of `900 billion trade deficits we are now in the ~500 billion range.

Now, the way GDP and economic growth is typically calculated, all government activity inherently reduces GDP and economic activity because it is confiscating all it’s funds from some other area of the economy. Even the printing of money to fund the deficit inherently takes away from the economy as it inflates the money supply.

ML/Alan,
Good do see you posting something that has to do with the post rather than swatting at some faux thoughts that someone has multiple personalities other than yourself.

ML

November 8, 2013 at 6:49 pm

Haha I’ve proved my point plus I don’t know how you have the time to change names constantly.

LayintheSmakDown

November 8, 2013 at 10:01 pm

Alan, you are pretty pervasive on this blog yourself.

ML

November 9, 2013 at 12:53 pm

Once again I’m not Alan, nor is Alan ML.

Michael Lovejoy, JD Campbell Law 13′.
I don’t know Alan so you’ll have to check with him.

Alan

November 9, 2013 at 3:29 pm

Yeah…..riiiiiight. Good luck convincing all of us about that. I like how you talk in the third person there too!

LayintheSmakDown

November 9, 2013 at 3:44 pm

He is me but not me…..quite a coyinkydink you “misposted” within a couple of minutes as each other not long ago. And then you are suddenly ” I was showing how you can double post”. Everyone knows you can double post…so just choose a persona and stick with it. I know I have, and I only changed once as I found Layinthesmak down as a much better name as that is what I do so well here…

Alan

So, you ‘answer’ a post that was in response to GOP Rules comment, but as LSD, and there’s no sockpuppet at work here? Perhaps GOP Rules and LSD should be joining Doogie in the padded cell. I’m sure he would welcome the company of other ‘voices in the head’

Alan

November 9, 2013 at 6:44 pm

Alex, all good GOP talking points. Pity none of it is based in reality of fact.